Thriving in Redmond’s Shadow

“Microsoft has big feet — and Microsoft’s partners are just toe jam.”

That’s the blunt assessment of one software developer. But he isn’t bitter.

“That’s still a much bigger market than some others — and it’s easier to
sell into,” he added.

Companies that build products on the Windows platform, whether official
Microsoft partners or not, must cope with Redmond’s long and winding product
roadmaps. They must also always have the knowledge that, sooner or later, Microsoft may decide to
roll their third-party functionality into the operating system.

“Everyone knows Microsoft is headed their way,” said Larry Watson,
president and CEO of RockySoft, a developer of inventory management
applications that complement Microsoft Business Solutions (MBS) software. “They
keep adding feature after feature to their operating system and eliminating
niche players. It keeps us hopping.”

Hank Barnes, vice president of marketing and product development for
business process management applications developer Ultimus,
said decisions have to be made in light of a myriad of Microsoft
issues.

“You look at the potential touch points you have with the various
Microsoft technologies: the operating system, the browser, the Office
family, SharePoint, BizTalk,” said Barnes, whose company
recently announced its integration with the BizTalk and SharePoint
server systems.

“For each of those pieces, you need to make some
prediction of the market impact of new releases: how fast it will be
adopted; how supporting that technology can help you sell more or position
you favorably with Microsoft, so they can help you gain and grow your own
business.”

But if ISVs must keep one eye on Microsoft, they keep their focus firmly
on their customers, Barnes said.

“You make product decisions based on the
needs of your customers and your market,” he said. “We built this company
into a leader not by following Microsoft’s product direction and being
viewed as a competitor of Microsoft, but as one that chose the Microsoft
platform because it lowers the total cost of ownership for customers.”

Even though they may sometimes feel like they’re dancing to Redmond’s drums, ISVs offer several compelling reasons for keeping on the hop.
Some companies count on customers to pile third-party apps on top
of Microsoft’s, leaving them a big enough piece of the pie.

At the same time, they feel they’re nimbler and more responsive than Microsoft can be.
So, even if Microsoft eventually moves into their turf, they’ll have time to
stake out their own customer base.

ISVs can also take advantage of
Microsoft’s own marketing and sales machine by teaming with the Redmond crew
on sales calls and taking its referrals. And finally, they can play the
role of clean-up crew, delivering on what Microsoft promises but doesn’t
quite come through with.

Layered Look

In the area of security, more is more. Third-party software
vendors aren’t concerned about Microsoft’s inclusion of security features,
such as spam filtering in Exchange Server.

“Companies will take the layering approach, not just one solution,” said
Laurie Murrell, communications manager for Sunbelt Software. “There will be
a share of people saying Microsoft has one, we’ll just use it. But most are
saying, ‘I have to layer this. I have to have more than one anti-spam and
one anti-virus solution, because one engine may get updated against a virus
faster than another.’ By using two anti-spam agents, you can get better
protection.”

Kim Akers, Microsoft’s senior director for Exchange marketing, agrees
with that principle.

“We believe that solving spam is going to be an
industry effort. It will take a lot of companies contributing; there are a
lot of ways you can go about attacking spam.”

Because each
anti-spam provider tends to use a different methodology, continued Akers, customers will tend
to use a couple different solutions that match their needs, leaving room for
third-party application providers.

Now or Later?

Sunbelt also offers ServerVision, a network management suite that
competes with Microsoft
Operations Manager (MOM)
.

“MOM is huge,” said Sunbelt product manager Phil Owens. “We’re going
after the smaller companies, not the huge ones that need MOM functionality.
MOM is also pretty expensive to get started.”

MOM, which was released to manufacturing last month, is an application that provides event and performance management, application monitoring and reporting features for the enterprise.

For others looking for opportunities ahead of Microsoft’s major product releases, Xamlon, maker of XAML development tools that plug into Visual Studio .NET, is a case in point. XAML is Microsoft’s new XML-based, user-interface
language, code-named Avalon, which will appear in future versions of XP and Longhorn,
the next version of Windows. Xamlon 1.0 will ship in October, while Longhorn is expected in some form in 2006.

“Our product provides what ultimately will come from
[Microsoft],” said Paul Colton, Xamlon CEO. “[Longhorn] might exist in a few
years, but that’s where we are today.”

The company said that Xamlon lets
developers use XAML to build and deploy applications for current versions of
Windows and that also will easily port to future Windows releases.

“We tell customers, ‘Follow us, so you don’t have to follow them,'”
Colton said. “If you want something stable today, go with us.”

Francis Lambert, director of product marketing for Zantaz, has a more colorful
opinion of the Microsoft touch.

“Microsoft moves into an area, and all the flowers wilt in the garden,” Lambert said. “But
Microsoft hasn’t traditionally been a company that sells highly scalable
enterprise software. Instead, they sell a lot of licenses.”

Zantaz offers
electronic communications management applications, including a solution for
archiving Exchange Server traffic. Lambert thinks Microsoft is years away
from providing large-scale e-mail archiving software.

Cooperative Competition

Often, of course, ISVs and Microsoft go together — on sales calls.

“Microsoft has two big edges: name recognition and also an openness to
working with third parties like ourselves,” said RockySoft’s Watson. “They
understand they can’t be everything to everybody, so they’re willing to open
doors to help close deals.” He said that attitude was really different from
other ERP vendors’ attitudes, even though RockySoft’s products work with all of them.

Jeffrey Porter, RockySoft director of marketing and sales, said he really
appreciates the MBS channel.

“We get most of our leads from Microsoft
themselves. Their primary channel within Great Plains has a tight community
and it’s very cooperative and open, as well.”

Neither is RockySoft’s Watson worried about Microsoft’s plans to roll its
four MBS products into one.

“It’s a very large undertaking, even for
Microsoft. It will slow their development down substantially, in terms of
getting out new features. So we’re delighted.”

Delivering on the Promise

Microsoft has a bit of a reputation for not getting things perfect the
first time, which also provides opportunity for ISVs on whose turf
Microsoft has begun to lumber. For example, if Microsoft does come out with
a new generation of MBS products, RockySoft plans to deliver step-up
functionality for that line as well.

“The first release will be half-baked,”
Watson said. “They’ll need us more than ever.”

Similarly, as Microsoft builds out Avalon, Xamlon plans to enhance its
own product.

“We’ll provide tools and resources that go above and beyond
what Microsoft has announced,” said Colton.

If and when Microsoft brings Avalon to
market, it could take several versions to get it right, he added. Even if
it does, he said, “Training and support is not Microsoft’s strong feature,
so later we’ll focus on that.”

Finally, ISVs say Microsoft will always need them. According to Sunbelt’s Murrel,
“Anything that helps the Windows environment run better helps them, too.”

Updates prior version to clarify the release of Microsoft’s MOM.

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